8o VALUATION, DEPRECIATION AND THE RATE-BASE 
requirements and so far in excess of a reasonable allowance for 
growth in the near future that it must be regarded as overbuilt 
and not, therefore, entitled to be taken into account at its full 
cost. 
Without attempting a full discussion of all of these factors 
which must be brought under review by an appraiser, particularly 
when the establishment of a rate-base is involved, attention 
will be given briefly to property not required for immediate use, 
and this will be followed by a discussion of depreciation includ- 
ing some matter relating to amortization and the replacement 
requirement, here conveniently considered though not all 
strictly pertaining to reduction of value. 
The Overbuilt Plant and Property not Required for 
Immediate Use 
Plant Capacity in Relation to Requirement. — Ordinarily, and 
with good reason, public utilities are constructed of a capacity 
for service somewhat in excess of immediate requirements. It 
is customary in anticipation of the increased demand for service 
which comes with the growth of the community to give the 
utility ample capacity. A part of the utility plant is built, in 
other words, to meet the demands of the future rate-payer. 
The question may well be asked to what extent this is justified 
and to what extent the rate-payer of today should be made to 
bear a burden for the benefit of the rate-payer of tomorrow. 
Prudent foresight in such matters is always commendable. 
It should be exercised by the private owner just as it would be 
exercised by wisely managed municipal public utility depart- 
ments. Future requirements should be foreseen and provision 
should be made for expansion of works. This may sometimes 
require the acquisition of lands, of rights of way, of water- 
rights, of reservoir sites, and the construction of works beyond 
immediate requirements. Outlays in this direction, within 
limits, are generally more economical than deferred acquisition 
or deferred construction, at the advanced value of land and the 
higher cost of construction of the future.